District of New Mexico: Let’s Get Retro: FERA’s Retroactive Provision Applies to Cases, Not Claims, And Doesn’t Violate the Constitution

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It is always refreshing to see a district court judge admit to making a mistake and take prompt action to correct it. In United States ex rel. Baker v. Community Health Systems, a case we’ve covered before, the District of New Mexico reversed course on a hot legal topic in FCA litigation–the proper interpretation of the retroactivity language in the Fraud Enforcement Recovery Act of 2009 (FERA).

As a refresher, recall that Congress expressly made portions of FERA retroactive, though not in the clearest possible way:

Section 4(f)(1) of FERA indicated that the changes to § 3729(a)(2), now codified at §3729(a)(1)(B), “shall take effect as if enacted on June 7, 2008, and apply to all claims under the False Claims Act ["FCA"] . . . that are pending on or after that date.”

Id. (citing FERA, Pub.L. No. 111-21, § 4(f)(1), 123 Stat. 1617, 1625). The problem is that Congress failed to define the term “claims,” which is problematic when the underlying statute–the FCA–itself creates liability for “false claims.” In other words, the question is whether the reference to “claims” in FERA is to the alleged false claims the FCA creates liability for or to claims brought under the FCA.

In Baker, the district court originally found the word “claims” to refer to the former–the actual false claims allegedly submitted by the defendant. However, after reviewing the Sixth Circuit’s ruling in Sanders v. Allison Engine Co., Inc., 703 F.3d 930 (6th Cir. 2012), the district court reversed itself and found that the term “claims” actually refers to the “claims” brought under the FCA and therefore “applies to this civil action, which was pending during the expressly stated effective date of June 7, 2008.”

The district court had also previously ruled that application of the retroactivity provision would violate the Constitution’s Ex Post Facto Clause. In light of its changed position on the meaning of the provision, the district court also ruled “that retroactive application of this provision to the entire case… would not violate the Ex Post Facto Clause.”